Asian shares push higher ahead of Fed meeting

Tokyo (Oct 28) Asian shares marked gains while the dollar held steady on Tuesday, as investors awaited the outcome of the U.S. Federal Reserve's two-day meeting that begins later in the session for clues to the direction of U.S. interest rates.

"We're seeing some disjointed moves in Asia today, with a degree of consolidation the dominant theme," IG market strategist Stan Shamu wrote in a note.

"Ahead of the European open, we're calling the major bourses positive with a bit of a recovery after yesterday's weakness," he said, predicting London's FTSE could open about 0.2 higher, while Germany's DAX and France's CAC could open up 0.3 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan shrugged off early losses and a lacklustre performance on Wall Street to rise about 0.4 percent as China and Hong Kong shares rebounded on hopes of more reforms to state-owned enterprises. The Shanghai Composite Index surged 1.7 percent.

But Japan's Nikkei stock average dropped 0.4 percent on concerns over corporate earnings after disappointing results from Canon Inc, despite upbeat economic data released before the market open.

Japanese retail sales in September rose 2.3 percent from a year earlier, government data showed, suggesting consumer spending is gradually picking up.

"Positive retail data is helping some retail stocks, but not strong enough to affect the whole market as investors are focused on the big overseas event now," said Takuya Takahashi, a strategist at Daiwa Securities.

The Fed is expected to announce the completion of its quantitative easing programme and will likely reinforce its stated willingness to wait a long while before hiking interest rates after a volatile month in financial markets.

Data on Monday showed U.S. services sector activity slowed in October to a six-month low, while manufacturing output in Texas decreased, providing more evidence that the Fed has reason to wait before raising U.S. interest rates.

The U.S. dollar steadied after slipping overnight on expectations of more dovish comments from the Fed.

The dollar index, which tracks the U.S. unit against six major rivals, inched up about 0.1 percent to 85.544.

The dollar was flat on the day against its Japanese counterpart at 107.82 yen, but remained below Monday's nearly three-week high of 108.38.

The greenback inched up slightly against the euro to $1.2702 , which came under pressure in the previous session after Germany's closely watched Ifo report of business sentiment came in at its lowest reading in almost two years in October, indicating that Europe's largest economy faces challenges.

U.S. crude for December was down about 0.4 percent at $80.72 per barrel after dropping as low as $79.44 on Monday, its lowest level since June 2012, after Goldman Sachs cut its price forecasts. Brent crude shed 0.6 percent to $85.34, as concerns about weak global demand and ample supply continued to loom over the market.